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ISLAMABAD: Federation of Pakistan Chamber of Commerce (FPCCI) is reportedly supporting some companies that are ‘rent-seekers’ in nature, in the name of proposed additions to the Custom General Order - 2017 (CGO), well informed sources told Business Recorder.

Official documents reveal that the Federal Government’s proposed list contains HS codes of the items that are supposed to be produced in the country and thus their imports are discouraged. The letter proposes addition of a number of industrial inputs to the list.

According to sources, industry, especially the ones from manufacturing sector, has received the proposed additions to CGO with shock and surprise, adding that such an exercise done in silos will create problems for local manufacturers as they import certain items not produced in the country to make complex value added goods that are then used for domestic consumption as well as exported.

“Increasing the cost of inputs will in turn increase the price of final goods for domestic consumption, as well as, in international markets rendering them non-competitive against products from other countries,” the sources maintained.

Local manufacturers, sources said, are already struggling to manage their costs in wake of high utility prices and the general inflationary pressures, and any additional burden will result in making local industry uncompetitive.

Addition to the CGO for certain items is generally warranted by the product being manufactured locally in the quantity and of quality that is required by industry and should be cost competitive to import. Government has to determine if the criterion given above are met.

After that the items are added to CGO. “Government also must see if such items are produced by multiple manufacturers; otherwise, addition to CGO will create monopolies. To ascertain the merits of addition to CGO,” the sources continued.

In this case, local industry has agitated that there has been no consultation on the matter and the items proposed to be added to CGO will potentially hurt their cost structure as there are no local manufacturer in Pakistan for certain items, and for several others only one manufacturer has been identified.

“Such proposal should not be considered any further without consultation with industry to examine merits of the proposal this exercise will come in form of decreased exports, increase in current account deficit and hike in prices for local consumers,” the sources maintained.

Copyright Business Recorder, 2022

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